One of the proposals often floated for integrating banking transactions is that of establishing a national switch for all ATM card holders.
It was first mooted as a Bank of Tanzania official answered a question in a press interview late last year. But it came up again in the National Assembly earlier this week when a Finance deputy minister revealed that the Bank of Tanzania was in the process of introducing a switch to facilitate ATM use.
The deputy minister said the bank has been carrying out an in-depth evaluation aimed at helping ATM banking in the country attain internationally recognised quality standards.
Going by the state of our banking, we think there are two ways of going into this. The first is to begin with what already exists – and one cannot ignore the exemplary work done by the 16 (originally six) banks under Umoja switch – which has greatly facilitated the discharging of services alongside integrating the bank’s operations.
Umoja switch now runs 110 of roundabout 1,300 ATMs countrywide as well as scores of Points of Sales out of a total of 2,000.
When the six banks introduced one ATM for customers from different banks, it was largely seen as something next to impossible. But when the switch finally began to work, it proved to be the easiest and most friendly solution to customers of different banks.
It all started when Akiba Commercial Bank, Azania Bank Limited, Dar es Salaam Community Bank, EurAfrican Bank, Tanzania Investment Bank and Twiga Bancorp teamed up to set up a jointly run switch card. That was principally in a bid to share machines for dispensing cash, thus avoiding the huge costs given their smallness. The consortium today boasts 16 members (banks) out of the country’s total of 40.
The switch’s project manager, Danford Mbilinyi, says there are many advantages to having a common switch – one being the reduction of running costs. Under Umoja, for example, the cost per ATM transaction is a lowly 500/- regardless of the bank the customer belongs to.
Other cash-point switches operate through Visa and MasterCard portfolio but withdrawal costs vary between 1,500/- and 2,000/- per transaction.
Under the common switch arrangement, customer can get a variety of transactions including cash withdrawal and deposits, balance inquiry, transfers between cardholders own accounts, pin change, mini statement, online airtime recharge or voucher purchase, third party financial payments and other electronic banking services.
As the search for a national ATM switch continues, learning from the experience of Umoja would therefore be ideal because it already exists and is working to satisfaction.
Other options would come with different models, complete with the possibility of entailing higher costs than Umoja.
But besides all this, since several banks have started integrating phone firms in discharging their services in an effort to create electronic wallets, there is every reason to consider linking the phone service providers’ transaction networks with banking systems.
Such an integrated system would, in our view, would support the creation of one of the best money transaction systems one would dream of putting in place. We hope this is the moon our experts are out to reach.